The Durable Goods Report today was quite a miss. I normally don’t care much about each individual economic report. Too much focus is given to each single reading, when it’s the broader trend that matters. The mania that surrounds the monthly payrolls report always makes me shake my head. But again, today’s report was quite a miss. And as a chart enthusiast, I wanted to put today’s miss in context.
Here’s the Durable Goods New Orders Month-over-Month chart over the past 10 years:
Down 13% month-over-month, vs. expectations for a 5% drop. Interestingly, even a 5% drop has only occurred a handful of times in the past 10 years. So a bad report was expected. But a 13% month-over-month drop was the second lowest reading in 10 years.
However, the less volatile Durables Ex-Transportation reading was only down 1.6%, vs. an expected rise of 0.2%. Maybe the Durables Ex-Transportation report is the more reliable indicator. It certainly has fewer ups and downs because it excludes the volatile aircraft sector. Here is the historical chart:
The drop becomes much less scary on the Durables Ex-Transportation series. Given that central banks are buoying sentiment regardless of the macro data, the real question going forward is whether all of this macro data eventually affects corporate earnings or not. Q3 earnings results should provide more clarity on that front in the next few weeks.